USD/JPY Forecast: Advancing on renewed dollar’s demand

Valeria Bednarik FXStreet

USD/JPY Current price: 107.39

Japan’s Industrial Production plunged 26.3% YoY in May.
US June inflation is foreseen at 0.6% YoY, core CPI expected at 1.1%.
USD/JPY could extend its advance in the short-term, faces resistance at 107.70.

The market’s optimism was tempered by coronavirus-related headlines late on Monday, sending Wall Street into the red ahead of the close and the dollar higher. Concerns surged when the state of California rolled-back reopening and announced a new lockdown on the back of record coronavirus cases. The US continues to report record new contagions of over 60,000 per day. Investors returning to the greenback hit safe-haven assets, with gold down to $1,790 a troy ounce and the USD/JPY pair recovering to 107.40, still boringly confined to familiar levels.

Data coming from Japan didn’t help the yen, as the country’s May industrial production contracted by 8.9% when compared to April, and fell 26.3% yearly basis. Capacity Utilization in the same month was down by 11.6%. The macroeconomic focus shifts now to US inflation, as the country will publish June CPI numbers today. The headline figure is seen at 0.6% YoY, while core inflation is foreseen at 1.1% in the same month, down from 1.2% in May.

USD/JPY short-term technical outlook

The USD/JPY pair is pressuring daily highs and neutral-to-bullish in the short-term. In the 4-hour chart, technical indicators head firmly higher within positive levels, reflecting increased buying interest, although the price is trapped between directionless moving averages, with the 200 SMA flat at around 107.50. The pair has multiple intraday highs from these last few days in the 107.70 price zone, that needs to be cleared to see the pair gather additional momentum.

Support levels: 107.20 106.95 106.60

Resistance levels: 107.75 108.10 108.45

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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